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Without naming names, McDonald’s CEO Don Thompson said during a conference call yesterday that
the company hasn’t seen any impact from its “most-recent competitor” in the breakfast market. In
apparent references to Subway and Taco Bell, he also noted that McDonald’s seems to face new rivals
every year, whether they’re “sandwich shops or taco shops.”

The comments came after
Taco Bell’s launch of its national breakfast menu late last month, which
generated great fanfare because of the chain’s TV ads featuring real-life Ronald McDonalds. But
Taco Bell’s lineup is still fairly limited compared with McDonald’s, and it’s not clear whether it
will be able to persuade people to visit its restaurants in the mornings.

Taco Bell, which is owned by Yum Brands, has declined to say how its breakfast is faring so
far.

McDonald’s, which has been in the breakfast business for about 30 years, counts on items such as
the Egg McMuffin and Sausage Biscuits to generate 25 percent of its U.S. sales. The company, based
in Oak Brook, Ill., has more than 14,000 U.S. locations, compared with about 6,000 for Taco
Bell.

During the earnings call yesterday, Thompson also seemed to draw a distinction between McDonald’s
breakfast and its unnamed rivals, noting that McDonald’s cooks its food on site.

Taco Bell has said it uses frozen eggs that are thawed and cooked each morning. Although
McDonald’s cooks eggs to order for some breakfast sandwiches, it also uses frozen products in some
cases. But the company has been trying to focus on improving its image as a chain that serves
quality food, emphasizing words such as
restaurant and
kitchen in reference to itself.

In the meantime, McDonald’s plans to intensify marketing for its breakfast with
a focus on its coffee. Although traditional fast-food chains are struggling to
boost sales, breakfast has remained a growing category in the industry.